3 Small Colleges Close. Is That a Trend?

It’s been a rocky spring for a few small liberal-arts colleges. Dowling College, which has two campuses on Long Island, and St. Catharine College, in Kentucky, both said this week that they would close — and their announcements came just two weeks after Burlington College, in Vermont, said it was shutting down.

Trustees at all three institutions waited until after graduation to make their decisions, which explains why the announcements came so close together. But their proximity served as a rude reminder that among many of the nation’s smallest private colleges, “none of us is very far from the wolf’s door,” as G.T. (Buck) Smith, president of Davis & Elkins College, said on Wednesday.

Even so, Richard Ekman, president of the Council of Independent Colleges, said nothing he’s heard suggests that the three closures represent anything like the beginning of a trend.

“While it’s true that the financial pressures on many small colleges are increasing,” he said, “I doubt that we will see more than the usual small number of closings each year.” A recent count by the council, he added, showed that an average of two or three small colleges had closed every year for the past three decades.

“The challenges are still what they have been — student numbers, competition, and discount pressures,” said Robert R. Lindgren, president of Randolph-Macon College. “I haven’t heard anything different in that respect recently.”

In some ways, the three closings reflect issues common to many small — and not-so-small — institutions. But in other ways, each of the situations is unusual:

• Burlington College, which dates to the early 1970s and has counterculture roots, borrowed in 2010 to buy a piece of property from the local archdiocese, and ended up with “crushing” debt. It had fewer than 200 students.

• Dowling College, which split off from Adelphi University in 1968, ran through seven presidents in the past dozen years and was said to have $54 million in debt. Undergraduate enrollment had dropped to about 1,700, and one of its two campuses was partially shuttered.

• St. Catharine College, which had been a two-year college until 2003, racked up debt for residence halls, a health-science facility, and a library — and then got put on the Education Department’s “heightened cash management” list after a review of its finances turned up “severe findings.” The college, which had about 600 students this year, predicted it would enroll only 475 in the fall.

Debt is the common theme among the three. Mr. Ekman and others noted that lenders that might once have given colleges a fair amount of flexibility with repayments have become much less forgiving lately.

“That’s 100 percent Dodd-Frank,” said Barbara K. Mistick, president of Wilson College, naming the 2010 law that placed new controls on a variety of financial services. “If you talk to bankers, they’re under increased regulation too. Small banks tell me they have regulators that practically have their own desks.”

‘They Ran Out of Runway’

Elizabeth Kiss, president of Agnes Scott College, said that when small colleges run into problems, “in many cases, it’s just bad luck.” Colleges that took on debt just before the 2008 crash, for instance, could end up in much worse shape because of it than those that borrowed 10 years earlier.

“Probably their strategy was, If we build it, they will come,” said Ms. Kiss of borrowing by the three institutions. “And maybe if they’d had a longer runway, it would’ve worked. But they ran out of runway.”

But Ms. Kiss and Ms. Mistick both said that colleges need to be “proactively dealing with their fiscal stress.” At meetings of the Council of Independent Colleges, Ms. Mistick said, “the sessions on fiscal issues are better attended than ever before — that’s a data point.” Ms. Kiss (whose name is pronounced “quiche”) said that “since the ’08 crash, a lot of presidents who weren’t necessarily sweating the finances on a regular basis had to start doing it.”

All three colleges that are closing had also tried to arrange mergers with other institutions, but with no success. Alice L. Brown, a former president of the Appalachian College Association who has written about college closures, said on Wednesday that while mergers make sense in some cases, “you can’t wait until the last minute to find a partner, and you have to have something the partner wants.”

She noted that North Central College, in Naperville, Ill., announced last month that it planned to acquire Shimer College, which has a prestigious great-books curriculum but has fewer than 150 students in space leased from the Illinois Institute of Technology, in Chicago. If the deal goes through, according to a news release, “North Central would create a ‘Shimer Great Books School’ within North Central’s academic structure.”

Ms. Brown is less optimistic than Mr. Ekman, however, about the future of small colleges that don’t have deep pockets. “These little schools don’t have any money to experiment by offering new options or programs,” she said. “And by the time they get on the train, it’s too late” — other colleges have beaten them to whatever the punch is.

Small Colleges, Big Problems

Adam Niklewicz for The Chronicle

Recent articles from The Chronicle about the financial challenges facing small colleges:

Small Colleges Bank on Fund Raising to Survive

The Truth-Teller: Once a Small-College Champion, Now a Tough Critic

Small Colleges Risk a Turn to Private Capital to Build Housing

Survival at Stake

Small Colleges’ Closure Rate Could Triple by 2017, Moody’s Says

The Painful Lessons of Sweet Briar and Cooper Union

“What I see is that a lot of people still have their heads in the sand,” Ms. Brown said of some small-college leaders. “They’re in a state of denial, thinking that God’s going to bless them and some donor’s going to come along with $50 million and it’ll be just like what it was once upon a time.”

The three colleges also had declining enrollments. At a time when even the strongest colleges compete hard for students, a college that has any kind of stain on its reputation, like a bad report from the Education Department, can find students headed elsewhere.

But small colleges also attract many of their students from middle-class families whose incomes have been largely stagnant for nearly a decade, Ms. Mistick noted. And as flagship state universities have lured elite students with honors colleges and similar programs, small liberal-arts colleges have found themselves enrolling more lower-income students and students eligible for Pell Grants.

“We serve a marketplace that is feeling some stress,” she said. But she added: “I would be on the optimistic side. Even in a down market there’s opportunity, and I do think that people get creative in challenging times.” Some colleges, she said, “are doing really interesting things.”

Ms. Kiss noted that four women’s colleges — colleges that many would say have niche appeal at best — “had their largest first-year classes ever last year.” The four were her own institution and Salem, Scripps, and Simmons Colleges.

Lawrence Biemiller writes about a variety of usual and unusual higher-education topics. Reach him at lawrence.biemiller@chronicle.com.